Andrew Wetzel's Musings

May 15, 2021

All Offers Must Be Received By … and Will Be Presented on ….

The type of Real Estate market produces some creative ways to “protect and promote” the interest of our clients.  The ebb and flow of who has “power” and “leverage” is interesting.  What may work (or frustrate others) in one market may appear insane in another.  That being said, we are required and expected to respect different “business models”.  However, do we have to do as we are told?

Many listing agents use a “Presentation of Offers” form which spells out what they want included in a purchase offer and how they conduct business.  I respect different “business models” and think the concept makes sense but I am left wondering about some of what they expect.  As long as the seller agrees that is fine but some of what I see seems counter-productive.  Here are a few examples:

  • An agent must submit an offer before being allowed to show a property;
  • A buyer must perform inspections before submitting an offer;
  • Do not have any contingency expire on a weekend or holiday.  If you do, add language to the agreement stating that the time frame is extended to the next “business day”. What exactly is a “holiday” anyway?;
  • Offers received after 5pm will be presented to the seller the next morning;
  • Offers received after 5pm on Friday will be presented to the seller on Monday;
  • Offers are to be submitted at a “specified time” and will be reviewed at a “specified time”.

Respectfully, if a seller agrees with any of these or other terms, perhaps that is their wish and their choice, that is fine but some of these make me wonder.  Real Estate is not a 9-5 job although it should not be 24/7 either.  I guess it all comes down to the type of market.  The question is:  do we have to comply?

We are in the hottest seller’s market I have seen in years.  Every house seems flooded with showings and multiple offers which, combined with the pandemic, many sellers and buyers are finding very frustrating.  To accelerate what I refer to as the “second step” to selling or buying Real Estate, the “third step” being when an offer is negotiated, some listing agents are doing one of two things to generate immediate interest.  They start showings at an “open house” or use a “Coming Soon” strategy to make buyers salivate before they can legally get in.  Both can work but may be creating a frenzy that will not play out as expected.  Some buyers are making offers “sight unseen”, waiving inspections and/ or going well over asking price, all in an effort to beat real or perceived “competition”.  Some agents just make their listings “active” and let the fun begin.  Th market will change.  It always does.

Some agents take this a step further and advertise when offers are due and when they will be presented to the seller.  These are bold steps that must be managed.  I find it interesting when a property listing expires unsold or a contract gets canceled and the listing agent neglected to remove language stating that offers were due and would be presented weeks or months ago.  OOPS!

Let’s suppose I activate a listing on Friday, state that offers are due by Monday at 3pm and will be presented to the seller at 7pm.  Pick any days of the week or time frames you prefer.  What happens next?  Compliant buyers and their agents will honor the listing agent’s instructions assuming they will be followed.  But will they?  Suppose they aren’t?  Some agents will try to submit offers after 3pm.  Does the listing agent say NO?  Is that buyer or agent penalized for being late?  Suppose the buyer agent has difficulty reaching the listing agent to say they have an offer or has trouble getting it to them?  We do so much electronically these days so that should not be a problem but it can be if there are Internet or equipment issues.

Suppose I have a buyer who does not like competition, may have lost out on one or more other houses they really wanted to own or they just want a quick answer so they can pursue other options before they sell?  What should I do?  I would submit an offer as soon as I can and, if my buyer is willing, we can make it expire prior to the 7pm deadline.  Listing agents are required to submit all offers in a timely manner.  While it is possible that their seller has said not to present anything before Monday at 7pm, if I were the listing agent I would let my sellers know that I had something, especially if it is compelling.  Suppose the seller says they want to accept the offer that came in early?

Buyers and their agents who were in the process of meeting the 3pm deadline have every right to be upset but did the listing agent do anything wrong?  Suppose a seller signs an offer before an “open house”?  At the very least, if my seller decided to sign an offer earlier than we advertised, I would let agents know what happened to be transparent and fair.  I would not want to waste their time and effort.  You never know, something could happen with the accepted offer and we may need to resume showings.  Perhaps a buyer is willing to provide a back-up offer.

Multiple offers are common these days which sounds nice but explaining them, evaluating their differences, responding to them and selecting the “winner” can be more complicated than it seems.  Are they taken at “face value”, which means that no one is provided an opportunity for a “second chance”, or are all or some “negotiated”?  What happens if they only “entertain” a few of them?  Even with multiple offers there is no guarantee that a seller will get what they want but they might learn the market’s perception of value.  Sellers determine the price but buyers determine the value.

What happens when the “sight unseen” buyer finally sees inside or the buyer who waived inspections questions the condition of the property or what the seller disclosed?  What happens when the appraiser files their report?  The “creativity” that secured a signed purchase agreement does not guarantee a deed transfer.  Real Estate is like 3-dimensional chess compared to a basic retail transaction where I pay you and I get my purchased item right away.  Real Estate provides “delayed gratification”:  every day until settlement may offer an unpleasant surprise.  It is never over until the seller has the buyer’s money and the buyer has the seller’s keys.

Even in “normal” markets, which generally means 3-6 months of available inventory, depending on what you believe, things can get contentious.  While we generally “cooperate” with each other, this is a competitive industry.  Only one buyer gets the house.  Buying or selling Real Estate are emotional decisions justified with logic.  Putting in the time and effort to buy or sell Real Estate requires commitment and exposing yourself to potential frustration.  They are not things most people do every day.  What one person thinks is creative can have quite a different reaction from someone else.

REALTORS have to manage expectations.  We need to explain the process of buying or selling to our clients.  We have done this before.  The consumer has 24/7 access to endless amounts of data and information, including television shows, but it takes an experienced, trained and educated professional to add two secret ingredients:  knowledge and insight.

When it comes to buying or selling what is likely your largest asset and biggest investment,

There is no time for inexperience, empty promises or false expectations.

HIRE WISELY:  We are not all the same!

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